‘Don’t wait’: sober warning to tenants, landlords
Australia's rental market has been in a state of considerable flux since COVID-19 hit.
Mixed messages from Prime Minister Scott Morrison and contrasting approaches at state level have served to confuse tenants, landlords and agents alike leading to some very anxious times.
The dust has largely setting on the macro changes made as a result of the coronavirus epidemic but the rental market remains dominated by price negotiation between landlords and tenants with agents in the middle.
The market has been flooded with new listings as a result of job losses, tenants moving back in with family and the collapse of short term listings due to the shutdown of the tourism industry.
But that doesn't mean tenants have things all their own way. The sands have shifted significantly from early on in the battle against COVID-19 when Prime Minister Morrison first declared a 'moratorium on evictions'.
"We have an office in Queensland with over 900 rental properties and the average there is always for tenants to be two days behind on their rent," says First National Real Estate CEO Ray Ellis who presides over Australia's third largest real estate network.
"But now that average has dropped to zero. Almost everyone is paying their rent right on time.
"Now, more than ever, as a result of COVID-19, we as Australians are seeing our rental payments or mortgage payments, as the case may be, as essential. It's our security.
"I'm not saying that people were necessarily spending their money on frivolous things before but we are now seeing rent and mortgage payments as essential. Because they pay for our home."
Tenants eager for discounts
Google search data indicates the current volume of prospective tenants searching for a new home to rent is at the highest point it has been in the past 12 months.
Shona Armstrong-Smith, Director and Property Manager of Century 21 in Sydney's Bondi Junction said her agency was filling around just six rentals a month at the height of the coronavirus lockdown. Now they are doing that each week.
"Last month was quite slow, this month we have had a lot more interest and June is already looking up on that, which is quite positive," she said.
"People are certainly feeling more confident. There are more people looking for rental properties and more people are applying."
However prospective tenants are still eagerly looking for discounts. Mrs Armstrong-Smith said the average tenant was attempting to bargain down the advertised by around 20 per cent.
"The market has gone down and prices have been impacted negatively," she said.
"Those tenants out there looking and applying know down the track where they will be with their jobs and that is giving them confidence and in turn making landlords more positive.
"The market conditions have certainly picked up since March and some landlords might be getting less rent but at least they know where they stand.
"As a landlord it's generally better to have a tenant rather than have a property vacant. Get someone in there and hope that the conditions improve over the next year rather than having it vacant."
Tricky issues for landlords
So, the chance for discounts for tenants are there, as is the potential for landlords to lock in good long-term tenants to ensure they have a reliable income stream and don't have to freeze their bank repayments, if they have them, which would likely result in a greater cost at the back end of the loan.
Mrs Armstrong-Smith said most landlords were not seeking to have their mortgage repayments frozen, if they have them, because of that extra cost. Preferring to act now.
Likewise, Mr Ellis said if renters out there were hanging out waiting for the deal of a lifetime, they would be waiting a very long time.
"If tenants are out there now, wishing and hoping to get an absolute bargain, my advice is it's not going to happen. Do what you can now. Don't wait. Because things will change and you will regret missing out.
"If you can afford to rent now. Do it."
Originally published as 'Don't wait': sober warning to tenants, landlords